WTO and Pakistan: Opportunities and Policy Challenges

From its inception the GATT had guided international trade most successfully until the early 1970s. However, afterwards the developed countries (DCs) increasingly recurred to new forms of trade restrictions not covered by the GATT rules. Ironically, these “grey measures” were mostly against the less developed countries (LDCs). These measures constrained international trade exactly at the time when the LDCs started penetrating developed markets. One of the main objectives of the Uruguay Round (UR) accord was to restrict the surge of protectionism. The accord was the most ambitious and detailed trade accord of all the GATT rounds. It established the World Trade Organisation (WTO). Before the UR accord the discrimination in textiles, clothing and agriculture was severe because tariffs and non-tariff barriers (NTBs) were employed in such a way that the overall effect of protection accumulated. The Round had agreed upon the harmonisation and reduction of tariffs, and elimination of NTBs (in stages) and thus it is expected that the effective protection will diminish in the DCs. The new accord has ensured multilateral rules for these sectors. All members expected that protection would be eventually lower with full implementation of the accord. In order to protect the interest of different groups the WTO has now lay down nondiscriminatory trading rules for services and trade-related aspects of intellectual property rights (TRIPs), thus covering all major fields of international trade policy.

Pension and Social Security Schemes in Pakistan: Some Policy Options

An examination of the public pension and social security schemes in Pakistan reveals that the provision of regular pensions is limited to formal sector employees only. A number of social security schemes that are operational in the public and private sectors cover a small proportion of old-age population, whereas a significant proportion of the elderly population working in the informal sector remains largely unprotected by social security schemes. As such, the challenge of meeting the needs of the increasing elderly population demands an improvement of the support base and social security system in Pakistan that emphasises the need to implement reforms of public pensions and programmes of social protection. Efficient deployment of resources and improvement of the governance structure are needed for effective welfare of the eligible sub-group of the elderly and the economically disadvantaged population.Social Security, Pensions, Pakistan

Pension and Social Security Schemes in Pakistan : Some Policy Options

An examination of the public pension and social security schemes in Pakistan reveals that the provision of regular pensions is limited to formal sector employees only. A number of social security schemes that are operational in the public and private sectors cover a small proportion of old-age population, whereas a significant proportion of the elderly population working in the informal sector remains largely unprotected by social security schemes. As such, the challenge of meeting the needs of the increasing elderly population demands an improvement of the support base and social security system in Pakistan that emphasises the need to implement reforms of public pensions and programmes of social protection. Efficient deployment of resources and improvement of the governance structure are needed for effective welfare of the eligible sub-group of the elderly and the economically disadvantaged population.social security, Pensions, Pakistan

State of Technology and Productivity in Pakistan’s Manufacturing Industries: Some Strategic Directions to Build Technological Competence

Historically, Pakistan’s economic growth record, especially of the manufacturing sector, has been quite satisfactory. However, since the late 1980s Pakistan has been facing a slow growth of manufacturing industries, particularly of the large-scale manufacturing units. This has led some economists to express the apprehension that perhaps de-industrialisation is taking place in the country. A careful analysis of the causes of this sluggish growth suggests that one of the main contributory factors is the slow growth in total factor productivity (TFP)—the best overall measure of competitiveness. What has caused this productivity slow-down? For Pakistan there is clear evidence of a relationship between the growth in total factor productivity and the ailing S & T apparatus. The results presented in the study also lend support to the hypothesis that knowledge capital, human capital, openness, and government policies are crucial determinants of total factor productivity growth. Given a liberal economic environment in the country, which is essential to improve efficiency and productivity, the paper offers four strategic directions in order to improve the status of the S & T system in Pakistan (1) augment the public sector S & T apparatus with the private sector funding and oversight; (2) take measures to upgrade scientific research institutions to the international standard; (3) streamline the technology creation, absorption, and diffusion system; and (4) enhance the demand for S & T in industries. These strategic directions are designed in such a manner that they work together towards a series of phased reforms, which can create incentives and market-based mechanisms to enhance the technology system without relying on a radical shift in the governance element of the bureaucracy.

National Income Accounting and Environment: A Case Study of Waterlogging and Salinity in Pakistan

Irrigation plays a crucial role in improving agricultural productivity, it has resulted in waterlogging and salinity problems in Pakistan due to both water seepage from canals and overdoses of water encouraged by inappropriate water pricing practices. As many as 2.2 million hectares of land forming 13 percent of the cultivated area in Pakistan suffer from an acute problem of waterlogging and salinity, i.e., water table is less than 5 feet from the normal surface level. [See Government of Pakistan (1993)]. Despite the government’s effort to resolve the problem through an expansive network of public tubewells under the salinity control and reclamation project (SCARP), the problem seems to have worsened over time. The higher water doses may increase the growth of output in the short run, but by degrading the agricultural lands and increasing impurities of potable water, etc., they adversely affect the long-run growth. These adverse effects of the inappropriate irrigation practices on agricultural productivity are generally not accounted for in the national income accounting system. Accordingly, there is a need to account for the forgone economic, social, and environmental benefits. In this regard, the environmental resource accounting provides a valuable information base for integrated development planning and policy. The approach allows for segregation and elaboration of all environment-related flows and stocks of traditional accounts, linkage of physical accounts with monetary environmental accounts and balance sheets, assessment of environmental costs and benefits, accounting for the maintenance of tangible wealth, and elaboration and measurement of the indicators of environmentally-adjusted production and income.

On Overinvoicing of Exports in Pakistan

Whereas the policy incentives were designed to promote exports from Pakistan, the incentive system instead led to illicit export practices, i.e., export overinvoicing due to the weaknesses of implementation. Such practices resulted in a significant financial loss to the country and undermined the effectiveness of the export-promoting policy. This paper has determined the presence of overinvoicing of exports in Pakistan and the geographic and product-wise patterns in export overinvoicing. The paper has applied the ‘partner-country data comparison’ technique. Empirical findings confirm the strong presence of export overinvoicing across trading partner countries and products. This conclusion is further supported by the evidence of a significant difference between the duty-drawback rate and the premium on foreign exchange in the kerb market. Convincing presence of export overinvoicing is the basis for a set of policy recommendations made in the paper.

Personal Earnings Inequality in Pakistan: Findings from the HIES 1993-94

The earnings of workers play important role in the well-beings of households’ as they account for the largest proportion of total household income. If earnings of workers are distributed unevenly, they contribute significantly to the inequality in the household earnings. It may not be a cause of serious concern if income inequality grows and income of the workers also grows throughout the population and the position of the bottom segment improves. It is however serious when gap between rich and poor increases by worsening the position of poor. To reduce the household income inequality it is therefore important to focus on the distribution of personal earnings and frame a policy. There are many cause of inequality in personal earnings. As workers income rises at varying rates, it may reflect the decision of household of their investment in human capital and decisions to acquire skills. The factors like education, occupation, gender, regional location, sector of employment, and non-market forces such as discrimination may also play a significant role in the distribution of earnings.

Exchange Rate Determination in Pakistan: A Simultaneous Equation Model

In recent years the gap between real exchange rate (RER) and nominal exchange rate (NER) has widened in Pakistan. A proper understanding of the determinants of real exchange rate can be extremely useful for the management of current account deficit. The results of this study show that the Simultaneous Equation Model gives better results than the Single Equation Model. The estimated coefficients reveal that changes in both monetary and real sector variables affect the equilibrium path of RER. The distinction between traded and non-traded goods can also help in proper real exchange rate management.